PRESENTED BY

ANJALI DAS V.M

MBA
RAJADHANI BUSINESS SCHOOL
Important objectives of advertising
are:-

TO INFORM
TO PERSUADE

TO REMIND
To inform the customers about the new
product.
To build a company image.
Giving information regarding the
features of the new product.
Giving ideas about the new uses of the
product.
Provide a good impression about the
product.
Persuading the buyers to purchase the
product as soon as possible.
Encouraging buyers to switch from
competitors product to our product.
Changing the perception about the
product.
Building brand preference.
Reminding the customers that the
product is readily available in the
market.
Reminding the buyers where to buy the
product.
Reminding buyers that the product may
be needed in the near future
eg: Umbrella
It defines how much to spend on
advertising.
It is one of an important decision.
It will not be same for every companies
& industries.
Stages in the product life cycle:- New
product have to spend more on
advertising than existing products.
Market share and consumer base:-
Companies which have high market share
usually require less for advertising.
eg: Apple products.
Advertising frequency:- Number of
repetitions needed to put.
Competition:- A product which facing
high competition have to spend more on
advertising.
Product substitutability:- Commodities
like beer, soft drinks, cigarettes etc
require heavy advertising to establish a
different image.
Setting advertising objectives.
Determining tasks to be performed
to achieve advertising objectives.
Setting advertising objectives.
Determining tasks to be performed
to achieve advertising objectives.
Preparing advertising budget.
Approval.
Allocation of advertising budget.
Monitor & control.
AFFORDABLE METHOD

PERCENTAGE-OF-SALES METHOD

COMPETITIVE-PARITY METHOD

OBJECTIVE-AND-TASK METHOD

JUDGEMENT METHOD
INCREMENTAL CONCEPT APPROACH

RETURN ON INVESTMENT METHOD

QUANTITATIVE METHOD

EXPERIMENTAL APPROACH
The name itself gives an idea about this
method.
The amount which is affordable by the
company will be taken as the budget for
advertising.
Eg: If a company is willing to spend 3
lakhs for promotion purpose, then it will
be the advertising budget of that
particular company.
A fixed percentage of sales will be
allocated for promotion.
Budget is set based on the availability
of funds & not on the basis of market
opportunities.
It encourages competitive stability,
which means our competitor will also
spend approximately same amount for
promotion.
In this method the company is spending
the same percentage of sales on
advertising as their competitors.
Managers believe that if they are
following this method it will help to
maintain the market share.
It helps to prevent promotion wars.
Promotion budget is prepared after
analyzing the overall objectives of the
company and also the tasks to be
performed to achieve the goals.
Then consider the cost required to
perform the task.
The sum of the costs is the proposed
promotion budget.
Implementing this method is very easy.
In this method the judgment of
experienced & senior managers are
taken and based on that prepare the
advertising budget.
The estimation will be approximately
correct.
Certain factors like availability of funds,
stage in the PLC, nature of consumers
etc are noted.
Also known as ‘Increase over Last Year’s
Budget’.
The budget of previous year will be
taken as a benchmark and calculate the
current year’s budget by adding or
subtracting from it.
Advertising cost is increased due to
increase in price level of advertising
inputs. So it is called as ‘incremental
budgeting’.
In this method cost incurred for
advertising will be taken as an
investment & not as an expenditure.
According to this method we are
investing on advertising with an
expectation of returning something
more than invested.
Income generated from advertising will
extends over a particular time period.
According to this method, the
advertising budget is prepared using
statistical methods like simulation,
multiple regression, probability etc.
It computes the budget based on the
factors which influence the budget.
It can be utilized only by experts.
It can be considered as a substitute to
the mathematical models & statistical
methods.
Experiments & tests are taken over
chosen market areas, consider the
results & prepare the advertising budget
based on the observations.
All the disadvantages faced by other
methods can be eliminated using this
method.
It can be considered as a pre-arranged
plan designed for the expenditure of
funds on advertising.
Advertising budget is the money
assigned for advertising campaign for a
definite time period.
The advertising manager after
discussion with marketing manager will
prepare the advertising budget.
Marketing management by Philip Kotler.